Australia Housing Market Update: May 2019
Australian dwelling values fell half a percent last month as the pace of home value declines continued to ease.
In this month’s housing marketing update, CoreLogic share that Australian dwelling values fell half a percent last month as the pace of home value declines continued to ease after moving through a recent low point in December last year when national dwelling values were falling at a much faster rate. The latest figures take national housing values 7.2% lower over the past twelve months to be down 7.9% since peaking in September 2017.
The slowing of the rate of decline is attributable to an easing in the market downturn across Sydney and Melbourne where an improving trend in the rate of decline has been evident over the past three months. In December last year, Sydney dwelling values were down -1.8%, with the pace of falls progressively moderating back to a month on month decline of 0.7% in April. Similarly, Melbourne values were down -1.5% in December, with the rate of decline slowing to -0.6% in April.
Although the national rate of decline has improved, the geographical scope of falling values has broadened. In April, dwelling values fell across every capital city apart from Canberra, while regional areas of Tasmania, Victoria and South Australia also avoided a fall. The broad-based nature of weak housing market conditions highlights that tighter credit conditions are having a dampening effect across all markets.
Annually, national dwelling values were down -7.2%; the largest decline since the twelve months ending February 2009, which was associated with the Global Financial Crisis.
Overall we are seeing further evidence that the worst of the housing market conditions might now be behind us. Values are still broadly declining, however the pace of decline has moderated since December last year and there are some tentative signs that credit flows have improved, albeit from a low base.
Considering that tighter credit conditions were one of the primary catalysts for the housing market downturn, any sign that credit availability is improving would be a welcome outcome for the housing market.
According to the Australian Bureau of Statistics, lending to households for dwellings, excluding refinancing was up 2.7% on a seasonally adjusted basis in February. Additionally, a rise in CoreLogic valuation platform activity throughout March hints at a further improvement in housing finance, which will likely be reported in the next ABS release.
Another indicator of a subtle improvement in the housing market can be seen in auction clearance rates that are holding around the mid-to-low 50% range, albeit on low volumes relative to a year ago. The correlation between auction results and housing market conditions is strongest in Melbourne and Sydney where auctions comprise a larger proportion of selling activity.
While a mid-50% clearance rate doesn’t suggest housing prices are set to bounce back, it does imply a closer fit between buyer and seller expectations and the improved auction success rate supports the reduced rate of decline in housing values across Sydney and Melbourne.
To find out more, read the May Housing Market Update transcript or take a look at the national update or your capital city update by clicking on the relevant link below: